There exists a large market for used vehicles in the United States. Those trading in used vehicles must establish value of the vehicles and insure against certain problems such as odometer fraud and title washing. It has been estimated that 1 out of 6 vehicles on the road have had the odometer turned back and 1 out of 30 used cars sold has had a salvage title.
One means for insuring against fraud is to examine and compare the public records available in the state title offices. To do so manually would be impractical, however. One would have to correspond with any number of title offices on the chance that a given vehicle had been titled in that office and then carefully study the available records for discrepancies effecting value or suggesting fraud. A used car auctioneer may have only several days in which to prepare for a sale of 50 or more vehicles. The auctioneer or dealer needs immediate access to the public records of the vehicle history presented in a way to immediately alert him to discrepancies. A system for providing such a service can only be practically implemented with high speed computers.
Title washing is the practice of titling a vehicle in one or more states to get a title which has the desired "facts". This takes advantage of the differing regulations and laws in various states pertaining to safety inspections, title branding, out-of-state title holders, mileage verifications, etc. For example, one might purchase a wreck from a junk yard in Missouri. A Missouri salvage title would be issued. If the salvage title were mailed to an accomplice in Arkansas, he could get the vehicle title there with a regular title because Arkansas does not have a salvage title. The vehicle could now be rebuilt and sold anywhere and the purchaser would not know that it had once been a wreck. The purchaser would think the vehicle came from Arkansas. To further cover the tracks, it would be possible to re-title the vehicle in Oklahoma or Texas, for example. This practice is said to be quite common.
Title discrepancies take two forms. One form of title discrepancy can be determined from inspection of a single title transaction record. For example, the record may reveal that the existing title is a salvaged title, a previous salvage title had been issued, or that miles were unknown or not provided at the time of the transaction. Another type of discrepancy is known as contextual discrepancy and can only be determined by studying and comparing the title transaction history. Contextual discrepancy checking permits the discovery of odometer readings which are not reasonable in light of the time lapsed between titles. It further enables the detection of missing titles or possible title washing. It may indicate duplicate titles have been issued where the prior title state is not the same as the state issuing the duplicate title.
All vehicles sold within the United States have a unique vehicle identification (VIN). Every title issued in the United States carries the VIN and, of course, each vehicle has the VIN impressed upon a name plate. The VIN is the key to identifying and tracing the public record of vehicles.